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but analysts' reactions ranged from optimism to skepticism.

On Thursday, Microsoft announced its acquisition of Alpharetta, Ga.-based Stratature Inc. The deal closed this week and financial terms of the acquisition were not disclosed, according to Alex Payne, group product manager, Microsoft Office Business Applications group. Stratature is a small, privately owned company and Microsoft partner that has products for "enterprise dimension management" and master data management, according to its Web site. Stratature described its products as aligning dimensional information, master data and reporting hierarchies across enterprise applications such as business intelligence (BI), corporate performance management (CPM), enterprise resource planning and operational systems. Most analysts interviewed for this article said Stratature's strength is enterprise hierarchy management -- only a small piece of the MDM puzzle -- and Microsoft agreed.

"MDM is a really broad category," Payne said. "So we chose to focus on enterprise hierarchy management. It's really important for products like Performance Point. The reason Stratature fit the bill perfectly is that it's more of a horizontal, generic MDM application. That means that we can create a platform for other partners and parts of Microsoft."

The first planned release is a platform with core analytical hierarchy management functions, Payne explained. Microsoft expects this to strengthen its business intelligence offerings such as Office Performance Point Server 2007, due out later this year. Hierarchy management software provides a single place to update, model and maintain customer, product or other hierarchies, typically a major challenge for customers. Historically, when business changes such as acquisitions or restructuring occurred, the affected hierarchies had to be manually updated in different analytical systems so that reports would be accurate. Products like Stratature's, and ultimately Microsoft's platform, provide a single place to make these changes, which can then be published to multiple applications like BI or CPM software. Further, Microsoft expects that its partners will build on the core functionality of the platform to deliver domain-centric MDM applications such as customer data integration and product information management, Payne said.

Customers and partners alike have been specifically asking Microsoft for this functionality, he said.

"A lot of companies will want Microsoft [for MDM] because they're buying products like Performance Point, Sharepoint, Exchange and the Dynamics set of applications," Payne said. "So they want Microsoft to provide enterprise hierarchy management because they want and expect it to integrate with Microsoft products. But also partners want [an MDM platform] because it allows them to focus on doing the value-add applications that are more subject area specific, like CDI and PIM."

The MDM platform will be delivered through Microsoft's Office platform group, Payne said. There is no public information available yet about a delivery date, roadmap, or pricing. However, in terms of integrating Microsoft and Stratature products, Payne noted that Stratature is a particularly good fit for Microsoft because it's built on top of SQL Server, which is partly why it was an obvious choice for an acquisition.

Now that the acquisition is completed, Microsoft is taking Stratature's products off the market but will continue to support its customers, Payne said. It's unclear how many customers Stratature has -- Payne said that number is not public yet.

"As we become public with our roadmap, and as we start to disclose where those new MDM technologies will show up, we'll work with those existing Stratature customers to get them into the technology adoption program. We'll work with them very closely as we develop the products as well," Payne said.

Analysts have mixed reactions to Microsoft's MDM acquisition

Industry analysts weren't surprised by the acquisition. Microsoft had to do something in the MDM market to compete with other major enterprise vendors such as IBM, Oracle and SAP, said Mark Smith, chief executive officer and executive vice president of research for San Mateo, Calif.-based Ventana Research.

"For Microsoft to be strategic and work within IT management of both large and midsized organizations, they had to do something here," Smith said. "It would take them too long to try to build out the capabilities through a traditional Microsoft product development cycle. By acquiring a company, they can get people and product and then work on how it interfaces with the Microsoft portfolio over the next 12 to 18 months."

"Many people have considered MDM a 'fringe' solution. Microsoft formally entering the MDM game with the Stratature purchase gives MDM added credibility. The Stratature acquisition adds fuel to our claim that MDM is a core component of a company's technology infrastructure and that every IT organization needs to consider it," Dyche and Levy wrote in an email.

But when it comes to delivering its promised platform, Microsoft will face stiff competition from big vendors that have been working on products for years, noted James Kobielus, principal analyst, data management, with Sterling, Va.-based Current Analysis Inc.

"We're relieved that Microsoft has finally gotten some religion on MDM. But now the hard work is ahead of it to develop a commercial product and differentiate itself in a fiercely competitive market where the leaders have a significant jump on Microsoft," Kobielus said.

Analytical vs. operational MDM a key issue

Other analysts point out that the acquisition appears to focus only on analytical MDM -- managing master data for reporting and OLAP systems -- and not the more challenging operational MDM. The difference is that analytical MDM does not focus on cleaning data at the source systems -- it simply adds an abstracted, semantic layer so that data can be managed for reporting, according to Andrew White, research vice president with Gartner Inc., a Stamford, Conn.-based analyst firm. This is something that business intelligence vendors have been doing for years -- even though that wasn't always called MDM, White said.

The bigger MDM challenge is managing and synchronizing master data in operational systems, a problem that CDI or PIM applications seek to address, White said. Microsoft has two partners that do this: Glasgow, Scotland-based VisionWare Plc for CDI, and Houston-based Riversand Technologies Inc. for PIM. They were featured in the acquisition press release, since they will ultimately take advantage of the new platform. But White wonders why Microsoft didn't acquire those vendors as well -- to give it more of an operational MDM strategy.

"Customers looking for MDM in general still have to look beyond Stratature because Microsoft has a lot to do to convert that small solution into something much more robust," White said. "If Microsoft is trying to compete with IBM, SAP and Oracle, they've got to buy more or develop Stratature very quickly and very richly."

Another analyst agreed that analytical MDM is not the main challenge facing most organizations considering MDM. The Stratature product does not provide operational MDM or "real-time bi-directional synchronization of master data across a heterogeneous environment," according to Rob Karel, principal analyst with Cambridge, Mass.-based Forrester Research Inc. As such, he does not consider the acquisition a "momentous announcement" -- or even a significant entry into the enterprise MDM market.

"The real pain with MDM is when you're dealing with a heterogeneous systems environment -- not just sharing data within a specific application or database, but when you're sharing information across multiple applications and databases. That's the hard part," Karel said. "It's easy to get fairly clean data within a silo; it's hard to get that clean, trusted data across silos. When you have a DB2 mainframe, a Microsoft application and an Oracle application all capturing similar information, and then you're trying to get a consolidated view and sort that information back into systems -- that's hard, and Microsoft has no play in that space."

Microsoft should do a better job at explaining what they mean by MDM, Karel said -- as should all vendors in the increasingly crowded and confusing MDM market. Right now, it seems like it would be a stretch for Microsoft to deliver what Karel would consider complete MDM functionality. Notably, it's missing a data quality tool for matching and merging master data, he said.

All that said, Karel thinks that the new platform will be useful to Microsoft's BI customers and that the acquisition was a good one. The new analytical MDM features will strengthen Performance Point Server, Dynamics and Sharepoint by creating better visibility into information.

When asked what advice he'd give customers, Karel said it depends on an organization's environment and goals.

"If they were a Microsoft-only environment looking to improve their business intelligence, then I'd say Microsoft has something that might help you. But I rarely get calls like that about MDM," Karel said. "I usually get calls from architects that are dealing with a much more complex information environment that deals with Microsoft and many other sources of data. And I would pretty much tell them that Microsoft does not have an offering that can support what you're trying to accomplish."

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